Mail.com Delivers IPO Bid

March must be nostalgia month in the Internet IPO world, for yet another
veteran of 1996’s “free e-mail” movement has filed to go public.

Like Juno Online Services, which submitted its S-1 on March 5, Mail.com Mail.com is seeking public
investor money — $57.5 million in this case – to finance its expansion
and a marketing and advertising blitz designed to kickstart the company
toward profitability.

But unlike Juno, which has repositioned itself for better or worse as an
ISP, Mail.com is basing its future on the free e-mail revenue model,
which relies primarily on advertising dollars. Given the numerous other
large vendors that already offer free e-mail – Microsoft, Netscape,
America Online, Yahoo and others – it is a dubious proposition.

The New York-based company launched its first commercial e-mail service
in November 1996, when it was known as iName (from which it switched to
Mail.com two months ago). Its shtick back then was to offer
“personalized” e-mail addresses by buying up the rights to dozens of
generic domain addresses such as lawyer.com, doctor.com,
engineer.com…you get the picture.

This clever idea garnered the company some press attention and
subscribers, if not a lot of revenues.

Today Mail.com boasts 5 million registered users – oops, make that
5,000,001, because I just signed up.
Of course, I’m never going to use the service, just as I never used my
Hotmail account. I merely wanted to see how easy it was to sign up.

And that’s the big problem facing the free e-mailers – the user numbers
aren’t real, a problem Mail.com concedes in its SEC filing and a reality
not lost on savvy potential advertisers that already have enough
questions about the Web as a delivery vehicle for their messages.

Further, Mail.com relies on numerous high-profile partners such as
AltaVista, CNET and Snap! to generate sign-ups, and must pay these
partners a cut of relevant revenues (or, in some cases, shares of
stock). And contracts with some of the big user generators such as Yahoo! are due to expire this year.

Mail.com’s revenues grew from $173,000 in 1997 to $1.5 million last
year. So, however, did losses, rising from $3 million in ’97 to $13.5
million last year.

Most of that was due to a dramatic increase in sales and marketing
costs. In 1997, Mail.com spent $930,420 on sales and marketing, or $5.37
for every dollar of revenue. Last year sales and marketing spending was
$7.67 million, which translates to $5.13 for every dollar of revenue
generated.

That ratio must improve much more rapidly for Mail.com’s strategy to pay
off, and for investors to feel comfortable that the company has a shot
at profitability in the foreseeable future.

Coming soon, but not that soon

GenesisIntermedia
recently was listed on a couple of online IPO calendars as pricing in
early March. Well, the IPO hasn’t happened yet; not because there are
any problems, a spokesman says, but because the company never planned it
for that soon.

According to the spokesman, GenesisIntermedia, which sells interactive
marketing services to businesses conducting electronic commerce, will
likely price its IPO in early April, with late March an outside
possibility. An offering of 2 million shares between $7 and $10 each is
expected. The company, based in Studio City, Calif., hopes to raise $22
million and will trade under the Nasdaq symbol “GMGI”. Underwriter is
Millennium Financial Group.

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